Navigating the increasingly complex crosscurrents of local government finance has become an essential skill for today’s public administrator. The convergence of rising expectations from citizens and council members, anemic growth in revenue sources, and the looming threat of unfunded pensions has complicated the local manager’s task of preparing a budget that balances income with expenditures. More fundamentally, today's managers must deliver services at a time when public confidence in government and its ability to perform have reached unparalleled lows.
When formulating a budget, the manager must balance what is economically best, politically expedient, and administratively possible. A manager must also respond to citizens' perceptions of an issue, whatever the accuracy of those perceptions. For that reason, budget choices must take into account their effect on citizens' perceptions. In a more general sense, effective leadership requires that the public administrator both shape and follow public opinion. Budget decisions must enhance citizens' confidence in the responsiveness and competence of local government leaders.
The budget document—and its arduous journey through preparation to adoption—express the basic political values of a government. Budgets reflect the compromises negotiated in the contentious process of budget adoption. They guide public administrators, defining government's economic and political role in a community and sanctioning, as well as limiting, administrative action. Budgets not only represent plans for the future, they also mold that future by the policies they contain. A good budget brings order to an uncertain world.
The budget document is foremost a tool for maintaining financial accountability. Yet as its preparation has evolved into a forum for establishing strategic goals and performance expectations, the resulting document has become the public record of a community dialogue for improving organizational performance and management oversight. The budget is a tool for holding administrators accountable for performance expectations. The quality of budget decisions made and policies formulated, however, depend fundamentally on the quality of information fed into the budgeting process.
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Bob Bland is professor and chair of the Department of Public Administration at the University of North Texas and the author of two ICMA books, A Revenue Guide for Local Government (2005) and A Budgeting Guide for Local Government (2007). He is currently chairing NASPAA’s Local Government Management Education Committee.